Bank OF England Chooses To Maintain Base Rate

The Bank of England has left the base rate of interest unchanged, it has emerged.

Earlier today, the Bank's monetary policy committee (MPC) announced that interest rates are to remain at 5.75 per cent for the duration of October. The third month in which rates have stayed consistent, the news is likely to be welcomed by personal loan borrowers and those with other forms of credit as it means that the amount of interest payable each month is to remain consistent. In addition, with interest rates appearing to show some form of stability now could be an opportune time for consumers to take out cheap loans. But in spite of such a move by the MPC, Britons are being advised to consider their financial situation carefully.

Commenting on the announcement, Michael Coogan, director general for the Council of Mortgage Lenders, stated the move was not surprising and that a reduction could be due within a few months' time. However, he urged those who have taken out secured loans and have other borrowing commitments to still take the time to plan their finances carefully.

He said: "We did not expect the Bank to cut rates today, but we do hope for and anticipate a cut in November. Even this is not a certainty though, so borrowers should continue to plan for rates at or around current levels. Pricing in the mainstream market is stable and fixed rates have started falling recently, but there is still uncertainty about how long it will take for stable funding to return to the sub-prime market. In the meantime, borrowers in this sector are facing tighter criteria and higher rates, although the availability of funding does seem to be improving."

Meanwhile, David Kuo, head of personal finance at the Motley Fool, stated that while the MPC's decision did not come as a surprise, the committee could have struggled to come to a decision. This, Mr Kuo reported, was due to the credit crunch, high oil prices and the difficulties experienced by Northern Rock. However, he stated that the public should not spend too much time looking towards what the Bank is going to do next but rather should "focus on their own finances amidst the uncertainty in the credit market".

He pointed out that those borrowers with "less-than-perfect credit records", who could have missed a number of repayments on personal loans and credit cards for example, may find that they are unable to access competitively-priced borrowing as lenders become stricter with their criteria. In addition, he stated that homeowners should take advantage of the current interest rate consistency by making as many contributions as possible into mortgages and other types of credit.

Following the MPC's announcement, now could well be an advisable time to consider taking out a cheap loan for those looking to supplement their spending, help fund purchasing a car or carrying out home improvements. Earlier this year, Julia Dallimore, marketing director for Picture Financial, asserted that the majority of Britons use credit as a "means of maintaining our standard of living". She added that borrowers are spreading their repayments over a longer period of time in an attempt to get a better grip on their finances.